Clear disclosure on your financial documents
The use of clear language in financial documents is mandated by regulations that apply to federally regulated financial institution and by voluntary agreements undertaken by Canadian banks.
Cost of Borrowing Regulations
The Cost of Borrowing Regulations require that federally regulated financial institutions give consumers all required information in language that is clear and presented in a manner that is not misleading. The regulations apply to disclosure documents for mortgages, loans, lines of credit, and credit card applications and agreements.
|For disclosure information …||the information must …|
in the application or credit agreement
be presented in a consolidated manner in a single location, and an information box must be presented at the beginning of the credit agreement or credit card application, or a related document that you receive at the same time. For examples of information boxes, click on the links below.
not in the application or credit agreement
be provided to you before you have a signed a contract or at the same time as the credit agreement or credit card application is provided to you. An information box must be presented at the beginning of the disclosure document. For examples of information boxes, click on the links below.
Federally regulated financial institutions are required to provide certain information in an information box at the beginning of each of the documents listed below. Click on the links for examples showing what the information boxes should look like and what information must be provided to you.
- Credit agreement for a fixed interest loan for a fixed amount mortgage
- Credit agreement for a variable interest loan for a fixed amount mortgage
- Credit agreement for a line of credit
- Credit agreement for a fixed interest loan for a fixed amount personal loan
- Application form for a credit card
- Credit agreement for a credit card
The format of the information box must be as follows:
- text that is in an easy-to-read font and has a font size of
- at least 12 points, with bold for titles and numbers, including interest rate, time period, dates and dollar amounts
- at least 10 points for any other text
- standard spacing between words and characters
- white space around text for easy reading
- dark text on a light background.
Note: Numbers such as interest rates, time periods, dates or amounts are not required to be repeated in the disclosure statement but may be referenced.
Code for plain-language mortgage documents
The member banks of the Canadian Bankers Association (CBA) have agreed to expand the use of plain language in mortgage documents. For more information about the Code for Plain Language Mortgage Documents, visit the CBA’s website.
FCAC oversees federally regulated financial institutions’ compliance with the Cost of Borrowing Regulations and monitors the plain language code.
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